Tumbling Chinese import demand sends AUD in a spin

Australian Dollar:

The Australian dollar relinquished recent gains throughout Tuesday, sold off on softer than anticipated Chinese import data. A twenty percent reduction in total imports in the year to September raised further concerns as to the strength of China’s domestic economy and prompted calls for further fiscal and monetary support from Chinese officials. The weaker than expected trade balance print prompted a run on commodity prices as anxiety surrounding the world’s second largest economy escalated. The Aussie plunged more than 1 cent moving back through 0.73 and 0.7275 to open this morning buying just 0.7250 U.S cents. Attentions now turn to Westpac Consumer Sentiment as a marker of domestic economic health while Chines CPI numbers attract the majority of trader’s considerations as a marker and directional guide through trade on Wednesday.  

• We expect a range today of 0.7150 – 0.7350

New Zealand Dollar:

The New Zealand dollar edged lower through trade on Tuesday as a widespread fall in commodity prices on the back of softer than anticipated Chinse import data forced investors into haven plays. Concerns surrounding global economic health escalated after a Chinese Trade Balance report revealed imports fell twenty percent in the twelve months to September prompting calls for additional fiscal and monetary support. Slipping back below 0.67 the Kiwi opens this morning buying 0.6646 U.S cents as attentions turn to RBNZ Governor Graeme Wheeler as he addresses concerns surrounding monetary policy and economic conditions.  

• We expect a range today of 0.6530 – 0.6730

Great British Pound:

The Great British Pound was unable to capitalise on a Greenback selloff relinquishing gains throughout Tuesday after an unexpected reduction in annualised consumer price pressures forced investors to extend the timeline of expectations surrounding a BoE rate hike. The Office for National Statistics CPI report showed consumer prices fell 0.1% in the twelve months to September highlighting concerns surrounding inflation and surprising investors who at the very least expected no change. Attentions now turn to key employment data, in particular average wage growth as a marker for possible increases in consumer demand and future inflationary tension.   

• We expect a range today of 2.0825 – 2.1225

Majors:

The U.S Dollar suffered loses across most major currencies through trade on Tuesday after softer than anticipated Chinese import data forced investors to extend the timeline of expectation surrounding a Federal Reserve rate adjustment. Chinese imports fell a whopping twenty percent in the twelve months to September highlighting concerns surrounding domestic demand and the broader Chinese economy. The soft print saw the USD touch three week lows and prompted a shift in trading ranges as investors look to price out an October policy amendment while global economic conditions and commentary from key Fed officials suggest a December rate alteration is becoming increasingly unlikely. FOMC members Tarullo and Bullard both implied further data was necessary before all voting members would be convinced to amend the current policy stance. The USD/JPY slipped back below 120.00 while the Euro pushed through 1.14 before paring gains on weaker than expected German Economic sentiment and opens this morning buying 1.1383. Attentions today turn to U.S Retail Sales numbers as the primary macroeconomic marker for direction.

Data releases:

• AUD: Westpac Consumer Sentiment
• NZD: RBNZ Governor Wheeler Speaks
• JPY: M2 Money Stock and PPI y/y
• GBP: Average Earnings Index 3m/y, Claimant Count and Unemployment Rate
• EUR: French CPI m/m and Industrial Production m/m
• USD: Core Retail Sales m/m, Retail Sales m/m, PPI m/m, Core PPI m/m, Business Inventories and Beige Book